hi. i currently have a Nexus One (3G only) with T-Mobile service. If I buy a Stratosphere (e.g. from Ebay), will my existing SIM card work in it? Do 4G phones step down to 3G?

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Will not work at all... Verizon's 3G network is a CDMA based network, TMobile's 3G network is GSM based, two completely different animals. Probably better off to go to Swappa or eBay and just grab a used phone there that is an actual TMobile phone.